How far can Bitcoin go?

By mystic_abhi | The Future of Money | 18 Aug 2021

Over the past decade, we have seen the price of Bitcoin soar exponentially. What was at $1 in 2011 is trading above $45,000 in August 2021. The journey has been really volatile but the digital asset has managed to maintain an uptrend throughout since its inception. But how far can the price of Bitcoin go?

That's a good question. Actually nobody knows I guess. But we certainly can speculate.

The value of any asset is determined by it's market capitalization. Gold is the top asset with the highest market cap of around $11 trillion.  That means there is $11 trillion worth of monetary energy stored in gold network. Gold has been used as a store of value for millennia. But it still is unable to secure value as it is subjected to many risks and incites theft and violence. Some people see treasury bonds as a store of value as they generate income while retaining their value. It is actually far better than gold, land etc. But recently with the digital age, we have seen the tech giants such as Apple with a $2 trillion market cap followed by Microsoft, Alphabet, Amazon, Facebook and so on. Some people have turned to apple and similar stocks to store their value. It might be good a few years but in the long run, nobody knows if those companies will continue to perform as they are now.

It is important to note that it took more than 30-40 years for these tech giants to reach a trillion dollar market cap where Bitcoin reached $1 trillion dollar market cap within just 12 years.  That's how massive bitcoin is. CEO of Ark Invest, Cathie Wood, says that if all 500 S&P companies put their 10% cash in Bitcoin, that alone will increase its price by $400,000. Recently we have seen more and more institutions like MicroStrategy, Tesla, Square and so on who have added Bitcoin in their balance sheet. MicroStrategy has over 100,000, Tesla over 42,000 and Square has more than 8000 bitcoins. We saw the first country, El Salvador, accept bitcoin as a legal tender and soon many south American governments will follow suit. Looking at the rate of adoption by institutions and governments, it seems like we are at a very early stage.

But what about all the monetary energy out there waiting for the perfect storage of value from Gold, Stocks, Bonds, Real estate and so on?

Michael Saylor, CEO of MicroStrategy, says if all the monetary energy seeking a secure asset is channeled into the Bitcoin network, the market cap of Bitcoin would reach anywhere between $100 to $300 trillion. That is to say, the price of Bitcoin would be in millions.

But what about the environmental risks?

Elon musk has taken a back seat recently highlighting the environmental concerns of Bitcoin mining. But Cathie wood argues that as people start to realize the value of Bitcoin as a new asset class which can outperform all the other forms of value storage, this concern is more beneficial than harmful. As Bitcoin mining takes a huge amount of electricity, institutions will turn towards more renewable forms of energy to power the system. So this further accelerates the sustainable energy adoptions which is highly beneficial for the planet.

Bitcoin is the most secure monetary asset of the 21st century and the moment humanity wakes up to this fact, there is going to be a huge inflow of monetary energy into this network. There is huge chance that perceived risks and challenges will benefit us in the long run instead of harming. As more people seek new ways to retain their purchasing power, the amount of monetary energy that is waiting to flow into the Bitcoin network is colossal. So when can we see the Bitcoin price at a million? Maybe it could take decades. Maybe it will take 10 years. Maybe it will only take 5 years. But as the cloud of uncertainty surrounding the network starts to move away, all we know is that it won't be too late.

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The Future of Money
The Future of Money

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